New Weekly eNewsletter

UpFront: Medical Manufacturing: A Risky Business

By Sarah A. WebsterEditor in Chief

Navigating the medical manufacturing industry these days reminds me of that game Minesweeper, where you try to clear a virtual minefield without blowing up a mine. You don’t know where the next mine will be, but you try to make educated guesses about what’s next and prepare. Yes, medical manufacturing is a landscape full of uncertainties.

First, there’s the fast-approaching 2.3% medical device excise tax, which was passed two years ago as part of the Patient Protection & Affordable Care Act and is slated to go into effect Jan. 1. That is unless, of course, the centerpiece of President Barack Obama’s healthcare reform is overturned by the US Supreme Court, which heard arguments on the law in March, or repealed by a new US president. Gov. Mitt Romney has pledged to do just that.

Whether the healthcare legislation sticks or not, a coalition of medical technology and trade associations have urged repealing the tax, saying it will curtail innovation and medical manufacturing in the US. They have a good argument to make when you consider that not all medical manufacturers are the size and strength of, say, a Medtronic. Over half of US medical device companies employ fewer than 20 individuals.

Then there’s the FDA’s 510(k) process, which, by many accounts, is just plain broken. There are calls to fix it from Consumer Reports to the Institute of Medicine (IOM) to manufacturers. They say that the process takes too long and doesn’t really protect patients. Evidence the global metal hip recall controversy, potentially affecting 90,000 patients worldwide. (http://tinyurl.com/mehipwiki)

The IOM's Committee on the Public Health Effectiveness of the FDA 510(k) Clearance Process in July 2011 recommended scrapping the current system and designing an all-new framework: "The committee believes that a move away from the 510(k) clearance process should occur as soon as reasonably possible."

In a likely response to the controversy, the FDA on March 28 issued what it called "first-of-a-kind guidance" (http://tinyurl.com/mefdareport) for medical device manufacturers, describing how it considers the benefits and risks of devices during pre-market review. Whatever happens next, it’s clear that some reform is on the horizon.

In the meantime, medical manufacturers will be challenged by more than simply designing and building life-improving and life-saving devices. They will need to have steely patience and a willingness to roll the dice on new investments that are likely to face ever-changing regulatory and tax hurdles. Good luck avoiding the mines.